Nomura announces acquisition of Meridien Hotels - Comments by Juergen Bartels...

Meridien Hotels will be merged with Principal Hotels, which was acquired in February 2001. The new Group will be re-financed with a mixture of equity and debt. The equity is being provided by Nomura International plc's Principal Finance Group (£227 million), Royal Bank Private Equity, the private equity arm of The Royal Bank of Scotland (£100 million), Alchemy Investment Plan (£35 million), Abbey National Treasury Services (£15 million) and Juergen Bartels (£10 million). The largest part of the financing is a £1.25 billion sale and leaseback agreement with The Royal Bank of Scotland with the balance being a mixture of senior debt being provided by CIBC World Markets and Merrill Lynch and mezzanine finance from Lehman Brothers. Additional facilities of £110 million to support capex and other commitments are being provided by CIBC World Markets and Merrill Lynch. CIBC World Markets and Merrill Lynch also acted as financial advisers to the purchaser.

The Royal Bank of Scotland has purchased 12 hotels from Meridien for approximately £1.25 billion including a capital expenditure facility of £250 million. These hotels will be simultaneously leased back to Meridien.

The non-executive Chairman of Meridien Hotels will be Guy Hands. Juergen Bartels, who was formerly Chief Executive of Starwood Hotels, will become Chief Executive.

Meridien is one of the leading independent luxury and business hotel brands. It has a portfolio of 150 owned or managed 4/5 star hotels with over 40,000 rooms in more than 55 countries. The group includes a number of internationally renowned hotels such as the Grosvenor House and the Waldorf in London, the Ritz in Madrid and the Eden in Rome.

Takumi Shibata, President and CEO of Nomura International plc, said:

"We are delighted to lead this acquisition. Nomura's Principal Finance Group has provided exceptional and consistent returns over the past six years. The combination of Guy's leadership and our backing is a winning formula. This model of Nomura providing the majority of the equity with others also participating has been used before and may well be a more frequently used structure as we find new ways of extending our operations and allowing others to participate in our success."

Guy Hands, Managing Director of Nomura 's Principal Finance Group, said:

"We are pleased to lead this acquisition with the backing of Royal Bank of Scotland, Alchemy and Abbey National. PFG's track record of regenerating and adding value to customer focussed businesses makes Meridien a perfect investment. Meridien has a proven management team and now, under the leadership of Juergen Bartels, one of the world's leading hoteliers who has backed this acquisition with his own money, it has a hugely bright future."

Juergen Bartels, new Chief Executive of Meridien, said:

"Meridien is one of the great brand names in the international hotel market. It now has a management team focussed on improving its reputation even further. That will require new ideas and a new approach backed up by substantial investment. The customers and staff of Meridien can be assured that we will deliver just such a programme."

Iain Robertson, Chief Executive, Corporate Banking and Financial Markets, The Royal Bank of Scotland, commented:

"This innovative deal is part of our strategy to invest in high quality assets within the hotel sector and across other industries which provide an attractive running yield as well as the opportunity for capital growth. The combination of our sector knowledge, underwriting capacity, specialist property financing skills and private equity expertise, coupled with the high quality of the hotels we have purchased from Le Meriden, makes this an attractive investment that fits very well with our aims."